Chamber survey paints mixed picture following referendum

Ros Snowdon
City Editor

​Employment in the Yorkshire and Humber region increased for the first time in eight months during September, as business activity recovered from a fall in the immediate aftermath of the EU Referendum.

The latest Lloyds Bank Regional PMI report said that while job creation was slower in Yorkshire than the UK average, business activity in the region rose at the sharpest rate since last November and the rate of expansion was quicker than the UK average.

A number of firms mentioned greater demand from clients, new business wins and the weaker pound helping to boost exports as factors behind growth

of output.

Both manufacturers and service providers recorded an increase in output, with the latter noting the most marked expansion.

The increase in activity was helped by a rise in new business, which companies linked to greater domestic and international demand.

Yorkshire & Humber’s PMI registered 55.6 in September, up from 54.1 in August, signalling a rise in activity that was faster than the UK average.

However the weakness of the pound weighed heavily on firms’ profit margins, with input prices rising at the strongest rate in more than five years.

Leigh Taylor, regional director for Yorkshire at Lloyds Bank Commercial Banking, said: “The latest survey data suggested the upturn in the Yorkshire & Humber region continued to gain momentum this September, as both activity and new orders rose at sharper rates.

“Stronger growth in the region encouraged firms to take on additional workers for the first time since the start of 2016, though the rate of job creation lagged behind the UK average.

“Meanwhile, cost burdens rose at the fastest rate in over five years, mainly caused by the weakness of sterling.”

Lloyds said input prices rose at the sharpest rate since July 2011 in September.

39 per cent of the survey panel recorded an increase in input prices, compared with less than 5 per cent that noted a contraction.

Greater cost burdens were partly attributed to an increase in imported raw material costs stemming from the weakness of the pound.

As part of efforts to protect profit margins, firms increased their charges by the greatest extent in almost five and a half years.

In September prices charged by private sector companies in the Yorkshire rose at the sharpest rate since May 2011.

Around 14 per cent of firms recorded higher charges, compared with only 3 per cent that registered a decline.

The rate of charge inflation was stronger than that seen across the UK level as a whole.

Lloyds said that according to anecdotal evidence, the depreciation of sterling and higher payroll costs encouraged firms to increase their selling prices. Goods producers registered a most marked rise in charges than their service sector counterparts.

Further afield, business activity recovered across England and Wales at the end of the third quarter, rising at a solid and accelerated rate.

September also saw a further increase in employment, though in most regions the rate of job creation remained slower than earlier in the year.

England’s PMI was 54.0 in September, up slightly from 53.7 in August and its highest reading since January. A reading above 50 signifies expansion, while a reading below signals contraction. The greater the divergence from the 50 mark, the faster the rate of change.

Business activity rose across all regions in England, led by solid growth in Yorkshire & Humber and the West Midlands (both at 55.6). The weakest performer was the South East (51.6), where output rose only modestly and at a slower pace than in August.